The company raised Rs1200cr by way of Equity infusion in Q4FY20 to strengthen its Capital Adequacy ratio. Of which Rs900cr was placed through a Qualified Institutional Placement (QIP) process, which was oversubscribed by nearly four times by marquee investors, both domestic and overseas. The balance Rs300cr was subscribed by Promoters. The Capital Adequacy Ratio (CAR) of the company as on June 30, 2020, was comfortable at 20.42% (As per Ind AS) as against the regulatory requirement of 15%.
The company offered moratorium to customers as per Board approved policy and have not availed moratorium on borrowing repayments. The Company holds a strong liquidity position with Rs7,169cr as cash balance as of Jun’20, with a total liquidity position of Rs11,677cr (including undrawn sanctioned lines). The ALM is comfortable with no negative cumulative mismatches across all time buckets.
Even after extending the moratorium to customers, for the second phase, the cash position of the company is adequate to meet all maturities and fixed obligations till Dec 2020.
In terms of the Covid-19 Regulatory Package of the RBI, the Company has granted to all eligible borrowers, at their request, moratorium on the payment of loan instalments falling due between March 1, 2020 and August 31, 2020, in accordance with the Scheme approved by the Board. The Company has also made impairment provisions on the assets as required under INDAS considering the impact of Covid-19.
The nation-wide lock down began in late March and subsequently extended till May 15, 2020. Stringent restrictions halted most economic activities in the country. The Covid-19 situation has significantly impacted businesses across industries. Disbursements were in the normal trends until the lock down was announced. Since the dealerships and registration offices were closed, there had been very minimal disbursements during the lockdown period (March 25 to May 15).
Post opening after May 15, operations have gradually resumed and there has been an improved demand and the Company has been able to disburse Rs3,589cr for the Q1FY21. Over 90 percent of the branches are operational.
The company’s tech initiatives and customer’s increased acceptance on digital lending amidst this Covid-19 pandemic are encouraging signs to look for in the near term.
With respect to Vehicle Finance, the company intends to maintain a strong focus on financing of tractors given the positive industry trends. Demand for Light Commercial Vehicles is expected to be significantly lower than expectation during Q2 FY21 due to lower private consumption, reduced freight demand and lower disposable income among transporters and it is expected that the demand is likely to bounce back from Q3FY21.
Two-wheeler segment will have a larger role in elevating the automobile sector in this year by providing affordable personal mobility options.
Cholamandalam Investment & Finance Company Ltd is currently trading at Rs214.10, up by Rs1.8 or 0.85% from its previous closing of Rs212.30 on the BSE.